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AtCor Medical Holdings Limited ASX Preliminary Year End Information

30 June 2015 (Previous corresponding period: Year ended 30 June 2014)

Lodged with the ASX under Listing Rule 4.3A.

Results for Announcement to the Market

$

Revenue from ordinary activities

Up 8% to $5,468,953

Loss from ordinary activities after tax attributable to members

Down 46% to $1,440,177

Net loss for the period attributable to members

Down 46% to $1,440,177

Dividends/distributions

Amount per security Franked amount per security

Final dividend Nil Nil

Interim dividend Nil Nil

Explanation of Revenue, Profit from Ordinary Activities after Tax and Net Profit For further explanation of the above figures please refer to the Directors’ report, media release, management discussion and analysis and market presentations. Other financial information required by the Appendix 4E is contained in the financial statements.

Explanation of Net Profit Refer to the year-end accounts.

Explanation of Dividends No dividends have been declared.

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AtCor Medical Holdings Limited

Supplementary Appendix 4E information

NTA Backing 2015 2014

Net tangible asset backing per ordinary share 2.4 cents 2.1 cents

Controlled entities acquired or disposed of Not applicable.

Additional dividend/distributions information No dividends have been declared or paid during or subsequent to the year ended 30 June 2015.

Dividend/distribution reinvestment plans The company has adopted but not implemented a dividend reinvestment plan.

Associates and Joint Venture entities Not applicable.

Foreign accounting standards Not applicable.

Audit alert Not applicable.

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ATCOR MEDICAL HOLDINGS Limited Annual report ABN 81 113 252 234

for the year ended 30 June 2015

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AtCor Medical Holdings Limited ABN 81 113 252 234 Annual report – 30 June 2015 Contents

1

Page

Corporate directory 2 CEO’s report 3 Directors' report 6 Auditor’s Independence Declaration 20 Annual financial report 21 Directors' declaration 52 Independent audit report to the members 53

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AtCor Medical Holdings Limited Corporate Directory

30 June 2015

2

Corporate directory

Directors

Mr Donal O’Dwyer Non-Executive Chairman BEng, MBA

Mr Duncan Ross CEO and Managing Director, BS

Dr Michael O’Rourke Non-Executive Director MD, DSc

Mr Peter Jenkins Non-Executive Director DSc (honorary)

Dr David Brookes Non-Executive Director MBBS FACRRM

Secretary

Mr Peter Manley CFO and Company Secretary BBus, CPA, ACIS

Notice of annual general meeting The annual general meeting of AtCor Medical Holdings Limited

will be held on: 13 November 2015

Venue and time are yet to be determined.

Principal registered office in Australia Suite 11, 1059 – 1063 Victoria Rd West Ryde NSW 2114

Share and debenture register Link Market Services Ltd Lvl 12, 680 George St

PO Box 20013 World Square NSW 2000

Auditor PricewaterhouseCoopers Darling Park Tower 2

201 Sussex St GPO Box 2650 Sydney NSW 1171

Solicitors Dibbs Barker Lvl 8, 123 Pitt St

GPO Box 983 Sydney NSW 2001

Stock exchange listings AtCor Medical Holdings Limited shares are listed on the Australian Stock Exchange under ASX code ACG.

Website address www.atcormedical.com

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AtCor Medical Holdings Limited CEO’s Report 30 June 2015

3

Dear Shareholder,

The 2015 financial year was a seminal year for AtCor Medical, made possible by a decade of hard work by both AtCor staff and key opinion leader physicians to establish the SphygmoCor system and the measures it provides of central aortic blood pressures, central wave form analysis and arterial stiffness as important, clinically relevant tests in medicine. These efforts culminated in the US Renal Physicians Association's filing for a CPT-1 (Common Procedural Terminology) code which describes the SphygmoCor test with the American Medical Association. Approval for the code was received in March 2015.

A CPT-1 code is the highest level procedural code available in the United States and is reserved for medical procedures that have both proven clinical efficacy and received widespread support from medical societies for their use in clinical practice. The new code which forms the basis for widespread clinical adoption of SphygmoCor, and equitable reimbursement for physicians, becomes effective from 1 January 2016.

The achievement of the most important strategic objective since AtCor's founding substantially eliminates the risk to our business model and opens for AtCor the US clinical practice market valued at over US$900 million. Key events that will precede introduction of the code include the announcement by the US Centres for Medicare and Medicaid Services, expected in November 2015, of the amount of reimbursement per test that physicians will receive.

Medicare, which covers 50 million retirees, will commence reimbursement from 1 January. This population group stands to benefit immensely as nearly 60 percent are deemed hypertensive, which is also known as higher than normal blood pressure. Private health insurance plans which represent the vast majority of the remaining market - more than 200 million covered lives – are expected to follow Medicare’s lead; they will conduct an internal review prior to issuing a coverage decision. AtCor and its consultants have begun the process of meeting with private health insurance plans to educate them on the new code and the over 900 peer reviewed publications that have fully validated the clinical usefulness of SphygmoCor as the undisputed market and technology leader.

Meeting the opportunity

AtCor has always taken a measured, good steward approach to ensure investment did not occur too far ahead of revenue. As the CPT-1 code readies for launch, this adds the vast US clinical market to our existing served markets in basic and pharmaceutical research. This means over US $1 billion of the global US $2 billion potential market for our products and services is now open to AtCor. The company will now begin to invest in reasonable scale to meet the opportunity. To fund this investment in sales, marketing and customer support, the company recently raised $5 million through a successful share placement to sophisticated investors and a fully underwritten rights issue.

Favourable environment for up-take of SphygmoCor

Both the US Government and private health funds are grappling with exploding healthcare costs. Premiums for private plans in some States are expected to rise by 40 percent in 2016. For the past three years private health funds have been subsidised by the US government against losses. This was to offset both the number of new patients they were asked to enrol with pre-existing conditions, and the broad spectrum of medical services mandated under the Affordable Care Act (Obama Care). According to the health law these subsidies expire at the end of 2015 and as there is no appetite in a Republican-led Congress to re-write this portion of the law, premiums for private plans are expected to rise substantially.

To address this challenge Medicare, private health funds and doctors are under significant economic and political pressure to become more efficient and to embrace more fully preventative and individualised medicine. This will accelerate the US healthcare delivery systems transition from a high cost, late stage disease model toward a new, more sustainable model of earlier identification and less costly intervention, enabling clinical problems to be addressed at their most treatable stage. SphygmoCor fully aligns with this objective. Our device, relative to many other cardiovascular devices, is both non-invasive and low cost. While patients may have the same brachial or cuff blood pressure, their central pressures will vary and cannot be inferred. The actionable information we produce shows whether an individual is at risk or not; whether intervention is required; and if already under treatment, whether the right drug or drug combination has been selected. With over US $300 billion being spent annually on the direct and indirect costs of cardiovascular disease this is the disease category which receives the highest level of spending, and the payers’ top target. Recently, Medicare released their proposed 2016 reimbursement price schedule for treating patients on kidney dialysis (end stage renal disease). One of three new measures they propose, which could affect reimbursement levels for individual kidney doctors, is their effectiveness at cardiovascular disease prevention. We also note feedback from AtCor’s private payer consultant that we are

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receiving strong interest in the upcoming CPT code compared to other technologies they have represented. We believe payers will be receptive to new ways of controlling their most burdensome disease category.

Support for clinical adoption from medical societies.

Medical Society support is absolutely critical to support market up-take of SphygmoCor. During May, the North American Artery Society released the findings of an expert panel, published in the Journal of Clinical Hypertension. The publication provided guidance with patient case illustrations of using central aortic pressure waveform analysis in clinical practice. In July, the prestigious American Heart Association (AHA) published a comprehensive statement on arterial stiffness. The authors stated that clinical measures of arterial stiffness (carotid-femoral pulse wave velocity) and central aortic pressure waveform analysis were established clinically and can be used to independently predict risk of cardiovascular morbidity and mortality. SphygmoCor is the only commercial device that meets all of the statement's recommended requirements for carotid-femoral pulse wave velocity, central aortic pulse wave analysis and can be performed on a single device. Regarding the size of treatment effect, both measurements were highly rated in the top category assigned by the AHA, receiving a Class 1 designation.

FY2015 review

AtCor’s FY2015 sales were $5.47 million, up 8.3%, or 1.1% on a constant currency basis, compared to sales in the previous corresponding period (pcp), and for the third consecutive year, all geographic regions posted positive contribution earnings. US clinical practice sales in advance of the CPT-1 code's introduction grew 52%. Driven by government funded studies, US sales to researchers were equally strong, growing 58%. While US sales growth was impressive and Asian sales increased by 23%, the global pharmaceutical trials business continued to experience delays and sales declined $0.7 million, down 38% on the pcp. AtCor retains a strong pipeline of potential new business, and has not lost any pharmaceutical contracts to competitors. Europe and Australia/New Zealand sales posted declines, based primarily on delayed orders.

Gross margin was 83.3%, up from 81.3% in the pcp. Despite strong foreign exchange headwinds and some additional investment in front of CPT-1, expenses grew a modest 4.3% to the pcp, and were flat on a constant currency basis. The loss after income tax was $1.5 million, compared to a loss of $2.7 million in FY2014. Of this improvement, a significant proportion is attributable to favourable foreign exchange movements.

Cash at 30 June was $3.45 million, compared to $2.17 million at 30 June 2014. Net cash outflows from operating activities for the year were $1.97 million compared to net cash outflows from operating activities of $1.36 million in FY2014, primarily attributable to lower customer receipts.

During the year in addition to achieving our CPT-1 objectives and the supportive guidelines from relative medical societies, a number of other key objectives were met.

De-risking the business

While the US CPT-1 code has substantially de-risked AtCor's business, we remain focused on the diversification of our pharmaceutical business. This year, we engaged new companies and added to the number of therapeutic areas in which we conduct trials. This included engagement with three new companies with which we expect to sign contracts over the next year. We also re-engaged with a company to commence an important trial in gout which is now underway. While we continued to experience contract delays, we did not lose any business. We expect over time our pharmaceutical business will return to growth. The pharmaceutical industry has taken note of the CPT-1 code which has led to increased up-take of SphygmoCor in the clinical market, and the rising incidence of drug effects being measured by doctors with our technology. We expect from our meetings that this will drive increased demand for SphygmoCor in pharmaceutical trials.

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Effective partnering

AtCor will continue to embrace effective partnering by signing with key alliance partners for mutual benefit and to leverage our growth.

In May, we announced the release of our co-developed product with SunTech Medical (a Halma plc company), Oscar 2 with SphygmoCor inside, in Europe, select Asian markets and Australia. SunTech’s market leading 24-hour ambulatory blood pressure monitor is now available with central blood pressures measurement. We expect to receive US FDA clearance to sell the product in the United States in the next two months. This expands AtCor’s product platform to three distinct devices and opens a new market segment for our technology. This product is also the first to contain SphygmoCor technology on a codified chip, allowing for further co-branding and partnership opportunities with original equipment manufacturers.

We completed a successful clinical study using SphygmoCor to assist cardiac pacemaker implantation. SphygmoCor measurement helped to modify settings to optimise pacemaker performance during implantation and annual patient examination. Commercialisation discussions are underway with two potential partners.

Geographical revenue diversification

We are focused on increasing the rate of sales growth in Asia, and in 2015 more than doubled our growth rate from 8% to 23%. This followed new initiatives in markets such as China and Korea which are now beginning to accelerate market penetration. We are also in advanced negotiations with a potential distribution partner in Japan, and anticipate agreement with a major partner before the end of 2015.

In closing

The AtCor team is highly motivated to succeed and focused on the opportunity in front of us. I would like to thank you, our investors, for making this opportunity possible as we continue to seek ways to maximise shareholder value. These are exciting times for AtCor Medical. We look forward to keeping you apprised of our progress and sincerely thank you for your continued support.

Sincerely,

Duncan R. Ross Chicago, Illinois USA 20 August, 2015

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AtCor Medical Holdings Limited Directors' report

30 June 2015

Directors' report Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of AtCor Medical Holdings Limited and the entities it controlled at the end of, or during, the year ended 30 June 2015.

Directors The following persons were directors of AtCor Medical Holdings Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

D O’Dwyer D.R Ross M.F O’Rourke P.R Jenkins D.L Brookes

Principal activities During the year the principal continuing activities of the Group consisted of designing, manufacturing and marketing medical devices for use in cardiovascular management.

Dividends - AtCor Medical Holdings Limited No dividend was paid during the financial year and the directors do not recommend payment of a dividend.

Review of operations The Group recorded sales of devices and services to hospitals, research institutions, pharmaceutical companies and clinicians during the year of $5,467,457 (2014: $5,053,284). The loss for the year after income tax amounted to $1,440,177 (2014: loss of $2,663,508). Further information on the operations and financial position of the Group and its business strategies and prospects is set out in the CEO’s report on pages 3-5 of this annual report.

Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year.

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30 June 2015 (continued)

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Matters subsequent to the end of the financial year Since the close of the financial year AtCor Medical has completed a fully underwritten 1:10 rights issue to shareholders at $0.18/share. The issue raised $3,202,811 before fees. The issue price of $0.18/share was the market value at the time of issue.

Likely developments and expected results of operations Further information on likely developments in the operations of the Group and the expected results of operations have not been included in this annual financial report because the directors believe it would be likely to result in unreasonable prejudice to the Group.

Environmental regulation All company products comply with the RoHS standard that is a requirement in the European Union. Otherwise the Group is not subject to any specific environmental legislation or regulations.

Information on directors Donal O’Dwyer BEng, MBA. Chairman - Independent non-executive. Age 62. Experience and expertise Independent director of the Group since September 2004 and chairman since November 2004. Extensive experience in the cardiovascular sector. Prior to joining the AtCor Board he was worldwide President of Cordis Cardiology, the cardiology division of Johnson & Johnson.

Other current directorships Non-executive director for 3 other listed public companies: Cochlear Ltd, Mesoblast Ltd and Fisher & Paykel Healthcare Corporation Ltd.

Former directorships in last 3 years Sunshine Heart Inc.

Special responsibilities Chairman of the Board Member of audit and risk committee Member of remuneration and nomination committee

Interests in shares and options Indirect: 4,529,055 ordinary shares in AtCor Medical Holdings Limited

Duncan R. Ross BS Managing Director and CEO. Age 57 Experience and expertise Executive director of the Group since November 2006. Over 30 years in life sciences and medical device industry. Most recently Group President Fisher Scientific Inc and Apogent Technologies Inc prior to joining AtCor Medical.

Other current directorships None

Former directorships in last 3 years None

Special responsibilities CEO

Interests in shares and options Direct: 2,103,052 ordinary shares in AtCor Medical Holdings Limited 6,000,000 options over ordinary shares in AtCor Medical Holdings Limited Indirect: Nil

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Information on directors (continued)

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Dr Michael O’Rourke A.M. MD, DSc Non-executive director. Age 78. Experience and expertise Co-founder and inventor of the core technology for the SphygmoCor system. Co-author of the standard reference textbook McDonald’s Blood Flow in Arteries. He also serves on the editorial Boards for the American Heart Association journal Hypertension, and on the editorial Boards of Journal of Hypertension, American Journal of Hypertension and Journal of American Society of Hypertension.

Other current directorships Victor Chang Foundation


Special responsibilities None.

Interests in shares and options Indirect: 10,641,396 ordinary shares in AtCor Medical Holdings Limited

Peter Jenkins. DSc (honorary) Independent non-executive director. Age 80. Experience and expertise Has served on the AtCor Group’s Board since 2000, including 4 years as chairman. Consultant to Colonial First State Private Equity until his retirement in December 2005. Previously had over 30 years experience in the pharmaceutical and medical diagnostics industry.

Other current directorships None


Special responsibilities Chair of remuneration and nomination committee Member of audit and risk committee

Interests in shares and options Direct: 1,330,334 ordinary shares in AtCor Medical Holdings Limited Dr David Brookes. MBBS FACRRM FAICD Independent non-executive director. Age 55. Experience and expertise Independent director for the Group since November 2008. A Fellow of the Australian College of Rural and Remote Medicine. He currently works as a general medical practitioner and has extensive experience in rural Australia, especially in paediatric and procedural practice.

Other current directorships Non-executive director and chairman of Reproductive Health Technologies Ltd


Special responsibilities Chair of audit and risk committee Member of remuneration and nomination committee

Interests in shares and options Direct: 174,082 ordinary shares in AtCor Medical Holdings Limited Indirect: 987,490 ordinary shares in AtCor Medical Holdings Limited

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Information on directors (continued)

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Company secretary The company secretary is Peter Manley (BBus, CPA, ACIS). Peter was appointed to the position of company secretary in March 2005. He also holds the position of Chief Financial Officer. Before joining AtCor Medical Holdings Limited he was Company Secretary and CFO for Sirtex Medical Ltd, a publicly listed medical device company. Prior to this he has held financial positions in a variety of large Australian and foreign-owned corporations.

Meetings of directors The numbers of meetings of the company’s Board of directors and of each Board committee held during the year ended 30 June 2015, and the numbers of meetings attended by each director were:

Meetings of committees

Full meetings of directors

Meetings of non- executive directors Audit Remuneration

A B A B A B A B

D O’Dwyer (chairman) 10 10 8 8 2 2 2 2

D.R Ross (CEO) 10 10 * * ** ** ** **

M O’Rourke 10 10 8 8 ** ** ** **

P.R Jenkins 10 10 8 8 2 2 2 2

D.L Brookes 9 10 7 8 2 2 2 2

A = Number of meetings attended B = Number of meetings held during the time the director held office or was a member of the committee during the year * = Not a non-executive director ** = Not a member of the relevant committee

Retirement, election and continuation in office of directors M O’Rourke retired by rotation as a director and was re-elected on 31 October 2014.

D Brookes retired by rotation as a director and was re-elected on 31 October 2014.

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Remuneration report (Audited) The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share-based compensation E Additional information.

The information provided under headings A-E includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited.

A Principles used to determine the nature and amount of remuneration The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: • competitiveness and reasonableness • acceptability to shareholders • performance linkage / alignment of executive compensation • transparency • capital management. Alignment to shareholders’ interests: • has company growth as a core component of plan design • focuses on sustained long-term growth in shareholder wealth • attracts and retains high calibre executives.

Alignment to program participants’ interests: • rewards capability and experience • reflects competitive reward for contribution to growth in company value • provides a clear structure for earning rewards • provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of ''at risk'' rewards.

Non-executive directors Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Board also refers to external surveys to ensure non-executive directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his own remuneration. Non-executive directors are entitled to receive share options, following approval by the shareholders of AtCor Medical Holdings Limited.

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Remuneration report (continued) A Principles used to determine the nature and amount of remuneration (continued)

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Directors’ fees The current base remuneration was last reviewed with effect from 1 January 2009. Fees are inclusive of committee fees.

Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The pool currently stands at $260,000, excluding share-based payments that are subject to separate shareholder approval.

Executive pay The executive pay and reward framework has four components: • base pay and benefits • short-term performance incentives • long-term incentives through participation in the AtCor Medical Holdings Employee Share Option Plan, and • other remuneration such as superannuation.

The combination of these comprises the executive’s total remuneration.

Base pay Structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. No external remuneration advisors were engaged during the financial year. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion.

There are no guaranteed base pay increases included in any senior executives’ contracts.

Benefits Executives receive benefits that may include health insurance and car allowances.

Retirement benefits Statutory superannuation payments are made quarterly to a fund selected by Australian based executives. Executives may also elect to salary sacrifice additional payments to their fund. No other retirement benefits are offered.

Short-term incentives Each executive has a target short-term incentive (STI) opportunity depending on the accountabilities of the role and impact on the organisation or business unit performance.

Each year, the remuneration committee considers the appropriate financial targets and performance management objectives (PMOs) to link the STI plan and the level of payout if targets are met. This includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger payment of STI.

For the year ended 30 June 2015, the PMOs linked to STI plans were based on group, individual business and personal objectives. The PMOs required performance in growing sales revenue, managing operating expenses and cash, and achieving specific targets in relation to project advancement, as well as other key, strategic non-financial measures linked to drivers of performance in future reporting periods. These PMOs are specific to each of the senior executive and payout (funding) is linked to sales performance..

The remuneration committee is responsible for assessing whether the PMOs are met. To help make this assessment, the committee receives detailed reports on performance from management.

The short-term bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. This is at the discretion of the remuneration committee.

The STI target annual payment is reviewed annually.

AtCor Medical Holdings Employee Share Option Plan Information on the AtCor Medical Holdings Share Option Plan is set out on pages 15 & 16.

Voting and comments made at the AtCor Medical Holdings Limited 2014 AGM

AtCor Medical Holdings Limited received a unanimous “yes” vote on a show of hands and 99% “yes” votes from proxies for its remuneration report for the 2014 financial year. No comments or specific feedback regarding the Group’s remuneration practices were received at the AGM or through the year.

Company performance

There is a strong correlation between sales performance and STI payouts, with non-financial targets also being increased or decreased in line and linked with sales outcomes. For FY2015 sales were marginally better than the previous year and well short of budget in most regions. This resulted in a significantly reduced average STI payout of approximately 20% of target.

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Remuneration report (continued)

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B Details of remuneration Amounts of remuneration Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of AtCor Medical Holdings Limited and the Group are set out in the following tables.

The key management personnel of the Group are the directors of AtCor Medical Holdings Limited (see pages 8-9 above) and those executives who report directly to the CEO or who have authority to significantly influence the direction of the Group. The executives are: • Peter Manley – Chief Financial Officer • Douglas Kurschinski – Senior Vice President & General Manager - AtCor Medical Inc • Mark Harding – Vice President, Global Marketing & International Sales - AtCor Medical Pty Ltd The cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed Short-term incentives above. Options and bonuses are granted at the discretion of the Board, on recommendation from the remuneration committee. Other elements of remuneration are not directly related to performance.

D Ross and D Kurschinski are paid in USD as they are US-based executives. Changes in base pay and non-monetary benefits are partly attributable to the weaker AUD against the USD through FY15 (Ave rate FY15: 0.8417, FY14: 0.9114).

Key management personnel of the Group

2015 Short-term employee benefits Post- employment

benefits

Long term benefits

Share based

payment

Name

Cash salary and

fees Cash bonus

Non Monetary Benefits

Super- annuation

Long Service leave

Termination Benefits

Options Total $ $ $ $ $ $ $

Non-executive directors D O’Dwyer (Chairman) 92,661 - - 8,571 - - - 101,232 M O’Rourke 42,932 - - 2,568 - - - 45,500 P.R Jenkins 51,660 - - 3,090 - - - 54,750 D.L Brookes 50,153 - - 4,639 - - - 54,792 Sub-total non-executive directors 237,406 - - 18,868 - - - 256,274 Executive directors D.R Ross (CEO) 425,734 65,671 23,839 - - - 68,217 583,461 Other key management personnel P Manley 198,701 12,605 739 29,991 2,272 - 13,452 257,760 D Kurschinski 315,121 63,768 23,724 - - - 21,358 423,971 M Harding 222,165 15,585 - 29,808 8,654 - 15,411 291,623 Totals 1,399,127 157,629 48,302 78,667 10,926 - 118,438 1,813,089

2014 Short-term employee benefits Post-

employment benefits

Long term

benefits

Share based

payment

Name

Cash salary and

fees Cash bonus

Non Monetary Benefits

Super- annuation

Long Service Leave

Termination Benefits Options Total

$ $ $ $ $ $ $ Non-executive directors D O’Dwyer (Chairman) 92,661 - - 8,571 - - - 101,232 M O’Rourke 42,932 - - 2,568 - - - 45,500 P.R Jenkins 51,660 - - 3,090 - - - 54,750 D.L Brookes 50,153 - - 4,639 - - - 54,792 Sub-total non-executive directors 237,406 - - 18,868 - - - 256,274 Executive directors D.R Ross (CEO) 373,335 16,826 20,726 - - - 88,141 499,028 Other key management personnel P Manley 201,653 5,338 - 19,442 8,344 - 17,362 252,139 D Kurschinski 279,244 16,633 20,728 - - - 30,264 346,869 M Harding 219,225 39,888 - 25,000 3,547 - 14,065 301,725 1,310,863 78,685 41,454 63,310 11,891 - 149,832 1,656,035

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B Details of remuneration (continued) The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Name Fixed Remuneration At risk – STI At risk - LTI

2015 2014 2015 2014 2015 2014 Non-executive directors D O’Dwyer (Chairman) 100% 100% - - - - M O’Rourke 100% 100% - - - - P Jenkins 100% 100% - - - - D Brookes 100% 100% - - - - Executive directors D R Ross (CEO) 57% 53% 34% 32% 9% 15% Other key management personnel P Manley 79% 78% 16% 16% 5% 6% D Kurschinski 64% 61% 32% 31% 4% 8% M Harding 66% 66% 30% 30% 4% 4%

C Service agreements Remuneration and other terms of employment for the CEO and the other key management personnel are formalised in employment agreements. Each of these agreements provide for the provision of performance related cash bonuses, other benefits including health insurance and car allowances, and participation, when eligible, in the AtCor Medical Holdings Employee Share Option Plan. Other major provisions of the agreements relating to remuneration are set out below.

All contracts with executives may be terminated early by either party with variable notice periods, subject to termination payments as detailed below.

D R Ross, CEO • Term of agreement – permanent. Commenced 8 May 2006 • Base salary for the year ended 30 June 2015 of US$370,000 which is reviewed annually by the remuneration

committee. Additionally the company contributes to a health plan on the employee’s behalf. Value in FY15 – US$19,918.

• Bonus potential – 60% of base salary. • Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to the

6 months base salary for the remaining term of the agreement.

In the event of a significant change in duties, material diminution in status or responsibilities, or Mr Ross is required to relocate more than 40 miles from his employment location; a 90-day option to exercise termination is available with payment equal to 1 year’s base salary.

P Manley, Chief Financial Officer • Term of agreement – permanent. Commenced 28 February 2005 • Base salary, inclusive of superannuation, for the year ended 30 June 2015 of $232,128 which is reviewed annually by

the remuneration committee. • Bonus potential – 20% of base salary. • Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to the

1 month base salary for the remaining term of the agreement.

D Kurschinski, Senior Vice President & General Manager, AtCor Medical Inc. • Term of agreement – permanent. Commenced 12 April 2004 • Base salary for the year ended 30 June 2015 of US$267,806 which is reviewed annually by the remuneration

committee. Additionally the company contributes to a health plan on the employee’s behalf. Value in FY15 – US$19,827.

• Bonus potential – 50% of base salary. • Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to 1

month’s base salary for the remaining term of the agreement. In the event of a change in control and if termination occurs within 90 days of the change of control payment of a termination benefit of equal to 6 month’s base salary is payable.

M Harding, Vice President, Global Marketing & International Sales - AtCor Medical Pty Ltd. • Term of agreement – permanent. Commenced 8 September 2008 • Bonus potential – 45% of base salary. • Base salary, inclusive of superannuation, for the year ended 30 June 2015 of $255,784 which is reviewed annually by

the remuneration committee. • Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to the

2 months base salary for the remaining term of the agreement.

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D Share-based compensation Options Options are granted under the AtCor Medical Holdings Employee Share Option Plan. All staff are eligible to participate in the plan (including executive directors). Options are granted at the discretion of the Board based on recommendations from the remuneration committee.

Options are granted under the plan for no consideration. Options are granted for a 5 year period, and one third of each new tranche vests and is exercisable after each of the first three anniversaries of the date of grant.

The terms and conditions of each grant of options affecting remuneration and were under option at the date of this report are as follows:

Grant date Expiry date Exercise price Value per option at

grant date Date exercisable

17 Feb 2011 17 Feb 2016 $0.12 $0.04 17 Feb 2012 17 Feb 2011 17 Feb 2016 $0.12 $0.04 17 Feb 2013 17 Feb 2011 17 Feb 2016 $0.12 $0.05 17 Feb 2014 21 Oct 2011 21 Oct 2016 $0.084 $0.03 21 Oct 2012 21 Oct 2011 21 Oct 2016 $0.084 $0.03 21 Oct 2013 21 Oct 2011 21 Oct 2016 $0.084 $0.03 21 Oct 2014 16 Feb 2012 16 Feb 2017 $0.098 $0.04 16 Feb 2013 16 Feb 2012 16 Feb 2017 $0.098 $0.04 16 Feb 2014 16 Feb 2012 16 Feb 2017 $0.098 $0.05 16 Feb 2015 23 Aug 2012 23 Aug 2017 $0.075 $0.02 23 Aug 2013 23 Aug 2012 23 Aug 2017 $0.075 $0.02 23 Aug 2014 23 Aug 2012 23 Aug 2017 $0.075 $0.03 23 Aug 2015 5 Oct 2012 5 Oct 2017 $0.075 $0.02 5 Oct 2013 5 Oct 2012 5 Oct 2017 $0.075 $0.02 5 Oct 2014 5 Oct 2012 5 Oct 2017 $0.075 $0.03 5 Oct 2015 26 Oct 2012 26 Oct 2017 $0.084 $0.03 26 Oct 2013 26 Oct 2012 26 Oct 2017 $0.084 $0.03 26 Oct 2014 26 Oct 2012 26 Oct 2017 $0.084 $0.03 26 Oct 2015 19 Nov 2012 19 Nov 2017 $0.085 $0.03 19 Nov 2013 19 Nov 2012 19 Nov 2017 $0.085 $0.03 19 Nov 2014 19 Nov 2012 19 Nov 2017 $0.085 $0.03 19 Nov 2015 29 Aug 2013 29 Aug 2018 $0.139 $0.04 29 Aug 2014 29 Aug 2013 29 Aug 2018 $0.139 $0.05 29 Aug 2015 29 Aug 2013 29 Aug 2018 $0.139 $0.05 29 Aug 2016 31 Oct 2013 31 Oct 2018 $0.181 $0.06 31 Oct 2014 31 Oct 2013 31 Oct 2018 $0.181 $0.07 31 Oct 2015 31 Oct 2013 31 Oct 2018 $0.181 $0.08 31 Oct 2016 28 Aug 2014 28 Aug 2019 $0.112 $0.03 28 Aug 2015 28 Aug 2014 28 Aug 2019 $0.112 $0.04 28 Aug 2016 28 Aug 2014 28 Aug 2019 $0.112 $0.04 28 Aug 2017 24 Mar 2015 24 Mar 2020 $0.194 $0.08 24 Mar 2016 24 Mar 2015 24 Mar 2020 $0.194 $0.09 24 Mar 2017 24 Mar 2015 24 Mar 2020 $0.194 $0.09 24 Mar 2018 25 Jun 2015 25 Jun 2020 $0.20 $0.08 25 Jun 2016 25 Jun 2015 25 Jun 2020 $0.20 $0.09 25 Jun 2017 25 Jun 2015 25 Jun 2020 $0.20 $0.09 25 Jun 2018

Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share within ten days following the receipt of exercise notice, payment and the original option certificate. The exercise price of options is to be no less than the weighted average price at which the company’s shares are traded on the Australian Stock Exchange during the five trading days immediately before the options are granted. Details of options over ordinary shares in the company provided as remuneration to each director of AtCor Medical Holdings Limited and each of the key management personnel of the Group are set out below. When exercisable, each option is convertible into one ordinary share of AtCor Medical Holdings Limited. Further information on the options is set out in note 30 to the financial statements.

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Remuneration report (continued) D Share-based compensation (continued)

15

Options Granted to Directors and other key management personnel under the Employee Share Option Plan since 30 June 2015 Nil options have been granted in the period from 30 June 2015 to the date of this report.

Details of Option Values The numbers of options to purchase ordinary shares held as at the date of this report by each Director of AtCor Medical Holdings and each of the other key management personnel are listed below. When exercisable, each option is convertible into one ordinary share of AtCor Medical Holdings.

Name Financial year granted # of securities Exercise price Expiration date

Vested and exercisable at

end of financial year

Directors

D O’Dwyer (Chairman) - - - - - D R Ross (CEO) 2012 2,500,000 $0.084 21 Oct 16 2,500,000 2013 1,400,000 $0.084 26 Oct 17 933,333 2014 2,100,000 $0.181 31 Oct 18 700,000 M O’Rourke - - - - - P Jenkins - - - - - D Brookes - - - - - Other executives P. Manley 2013 150,000 $0.075 23 Aug 17 - 2014 500,000 $0.139 29 Aug 18 166,667 2015 200,000 $0.112 28 Aug 19 - D Kurschinski 2011 300,000 $0.12 17 Feb 16 300,000 2012 500,000 $0.098 16 Feb 17 500,000 2013 1,000,000 $0.075 23 Aug 17 666,667 2014 725,000 $0.139 29 Aug 18 241,667 2015 275,000 $0.112 28 Aug 19 - M Harding 2011 200,000 $0.12 17 Feb 16 200,000 2013 133,333 $0.075 23 Aug 17 133,333 2014 300,000 $0.139 29 Aug 18 100,000 2015 450,000 $0.112 28 Aug 19 -

The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The model inputs for options granted during the year ended 30 June 2015 included: (a) options are granted for no consideration, one third of each tranche vests and is exercisable after each of the first

3 anniversaries of the date of grant (b) average exercise price: $0.13 (2014 - $0.16) (c) expiry date: 5 years from grant date (2014 – 5 years from grant date) (d) Weighted average share price at grant date: $0.13 (2014 - $0.13) (e) expected price volatility of the company’s shares: 60% (2014 - 60%) (f) expected dividend yield: Nil% (2014 - nil%) (g) risk-free interest rate: 2.25% (2014 – 3.0%).

Shares provided on exercise of remuneration options 1,366,667 ordinary shares in the company were issued as a result of the exercise of remuneration options by directors of AtCor Medical Holdings Limited and other key management personnel of the Group in 2015 (2014: Nil).

No amounts are unpaid on any shares issued on the exercise of options.

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Remuneration report (continued) E Additional information Principles used to determine the nature and amount of remuneration: relationship between remuneration and company performance A bonus structure is used to reward executives for performance against short term (current year) Group and personal goals. Longer term company performance is ensured through participation by executives in the company share option plan.

Details of remuneration: cash bonuses and options For each cash bonus and grant of options included in the tables on page 13, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonus is payable in future years. The options vest in three equal tranches over 3 years, provided the beneficiary is still employed by the Group at the time of vesting. No options will vest if this condition is not satisfied, hence the minimum value of the option yet to vest is nil.

Cash bonus Options

Name Paid Forfeited

Financial year

granted Vested Forfeited

Financial years in which

options may vest

Minimum total value

of grant yet to vest

Maximum total value


% % % % $ $ D O’Dwyer - - - - - - - - P Jenkins - - - - - - - - M O’Rourke - - - - - - - - D Brookes - - - - - - - - D R Ross (CEO) 24% 76% 2012 100% - 2013 - - 100% - 2014 - - 100% - 2015 - - 2013 100% - 2014 - - 100% - 2015 - - - - 2016 - 15,942 2014 100% - 2015 - - - - 2016 - 49,492 - - 2017 - 52,961 P Manley 28% 72% 2011 100% - 2012 - - 100% - 2013 - - 100% - 2014 - - 2012 100% - 2013 - - 100% - 2014 - - 100% - 2015 - - 2013 100% - 2014 - - 100% - 2015 - - - - 2016 - 3,853 2014 100% - 2015 - - - - 2016 - 7,680 - - 2017 - 8,279 2015 - - 2016 - 2,252 - - 2017 - 2,461 - - 2018 - 2,651

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Remuneration report (continued) E Additional information (continued) Cash bonus Options

Name Paid Forfeited

Financial year

granted Vested Forfeited

Financial years in which

options may vest

Minimum total value


Maximum total value


D Kurschinski 37% 63% 2011 100% - 2012 - - 100% - 2013 - - 100% - 2014 - - 2012 100% - 2013 - - 100% - 2014 - - 100% - 2015 - - 2013 100% - 2014 - - 100% - 2015 - - - - 2016 - 8,561 2014 100% - 2015 - - - - 2016 - 11,137 - - 2017 - 12,005 2015 - - 2016 - 3,097 - - 2017 - 3,383 - - 2018 - 3,646 M Harding 14% 86% 2011 100% - 2012 - - 100% - 2013 - - 100% - 2014 - - 2012 100% - 2013 - - 100% - 2014 - - 100% - 2015 - - 2013 100% - 2014 - - 100% - 2015 - - - - 2016 - 3,424 2014 100% - 2015 - - - - 2016 - 4,608 - - 2017 - 4,967 2015 - - 2016 - 5,067 - - 2017 - 5,537 - - 2018 - 5,966

Share-based compensation: Options Further details relating to options are set out below.

A B C D E

Name

Remuneration consisting of

options Value at grant

date Value at

exercise date Value at lapse

date Total of

columns B-D $ $ $ $ D O’Dwyer (Chairman) - - - - - D R Ross (CEO) - - - - - M O’Rourke - - - - - P Jenkins - - - - - D Brookes - - - - - P Manley 3% 7,364 73,050 - 80,414 D Kurschinski 2% 10,125 - - 10,125 M Harding 6% 16,569 66,567 - 83,136

A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B. B = The value at grant date calculated in accordance with AASB 2 Share-based payment of options granted as part of

remuneration. C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year. D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year.

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Shares under option Unissued ordinary shares of AtCor Medical Holdings Limited under option at the date of this report are as follows:

Date options granted Expiry date Issue price of

shares Number under

option

17 February 2011 17 Feb 2016 $0.120 1,362,500 21 October 2011 21 Oct 2016 $0.084 2,500,000 16 February 2012 16 Feb 2017 $0.098 1,607,500 9 August 2012 9 August 2016 $0.080 1,460,000 23 August 2012 23 Aug 2017 $0.075 2,955,000 5 October 2012 5 Oct 2017 $0.075 200,000 26 October 2012 26 Oct 2017 $0.084 1,400,000 19 November 2012 19 Nov 2017 $0.085 125,000 29 August 2013 29 Aug 2018 $0.139 3,193,333 31 October 2013 31 Oct 2018 $0.181 2,100,000 28 August 2014 28 Aug 2019 $0.112 1,825,000 24 March 2015 24 Mar 2020 $0.194 350,000 25 June 2015 25 Jun 2020 $0.200 150,000 19,228,333

No option holder has any right under the options to participate in any other share issue of the company or any other entity.

Shares issued on the exercise of options 1,786,667 ordinary shares of AtCor Medical Holdings Limited were issued during the year ended 30 June 2015 on the exercise of options granted under the AtCor Medical Holdings Employee Share Option Plan. No further shares have been issued since that date. No amounts are unpaid on any of the shares.

Insurance of officers During the financial year, AtCor Medical Holdings Limited paid a premium of $14,950 to insure the director and secretaries of the company and its Australian based controlled entities, and the general managers of each of the divisions of the Group.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for them or someone else or to cause detriment to the Group. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001.

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Non-audit services The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the company and/or the Group are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out in Note 21 of the audited accounts.

The Board of directors has considered the position and, in accordance with the advice received from the audit committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality

and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in the relevant

professional requirements, including reviewing or auditing the auditor's own work, acting in a management or a decision-making capacity for the Group, acting as advocate for the Group or jointly sharing economic risk and rewards.

During the year the fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms. Details are shown in Note 21 of the audited accounts.

Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 20.

Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

Director

Sydney 20 August 2015

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AtCor Medical Holdings Limited ABN 81 113 252 234 Annual financial report – 30 June 2015 Contents

21

Page

Financial report Statement of comprehensive income 22 Balance sheet 23 Statement of changes in equity 24 Cash flow statement 25 Notes to the financial statements 26 Directors' declaration 52

Independent auditors’ report to the members 53

This financial report is the consolidated financial report of AtCor Medical Holdings Limited and its subsidiaries. The financial report is presented in the Australian currency.

AtCor Medical Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Suite 11, 1059-1063 Victoria Road West Ryde NSW 2114

A description of the nature of the consolidated entity's operations and its principal activities is included in the CEO’s report on pages 3 to 5 and in the directors’ report on pages 6-19, both of which are not part of this financial report.

The financial report was authorised for issue by the directors on 20 August 2015. The company has the power to amend and reissue the financial report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the Group. All press releases, financial reports and other information are available at our Investors section on our website: www.atcormedical.com.

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Statement of comprehensive income For the year ended 30 June 2015

Consolidated 2015 2014

Notes $ $

Revenue from continuing operations

Revenue from sale of goods and services 5 5,467,457 5,053,284 Other revenue 5 1,496 8,081 Total revenue 5,468,953 5,061,365

Other income 6 1,455,765 502,754

Expenses from ordinary activities Cost of sale of goods (907,180) (942,887) Marketing and sales expense (3,680,121) (3,746,015) Product development and regulatory expense (1,623,980) (1,384,992) Occupancy expense (171,640) (154,511) Administration expense (1,981,974) (1,927,177) Foreign exchange loss - (72,045) (Loss) before income tax (1,440,177) (2,663,508)

Income tax expense 8 - -

(Loss) for the year (1,440,177) (2,663,508) Other comprehensive (loss)/income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations (668,299) 104,068

Total comprehensive (loss) for the year (2,108,476) (2,559,440) Total comprehensive (loss) attributable to members of AtCor Medical Holdings Limited (2,108,476) (2,559,440) Cents Cents Earnings per share for (loss) attributable to the ordinary equity holders of the company: Basic earnings per share 29 (0.9) (1.7) Diluted earnings per share 29 (0.9) (1.7)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

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Balance sheet As at 30 June 2015


Notes $ $

ASSETS Current assets Cash and cash equivalents 9 3,449,943 2,168,156 Trade and other receivables 10 1,548,908 1,547,712 Inventories 11 539,398 537,539 Other 12 163,862 98,287 Total current assets 5,702,111 4,351,694

Non-current assets Plant and equipment 13 251,485 279,576 Total non-current assets 251,485 279,576

Total assets 5,953,596 4,631,270

LIABILITIES Current liabilities Trade and other payables 14 1,454,345 1,215,573 Provisions 15 128,976 110,728 Total current liabilities 1,583,321 1,326,301

Non-current liabilities Provisions 16 36,282 21,022 Total non-current liabilities 36,282 21,022

Total liabilities 1,619,603 1,347,323

Net assets 4,333,993 3,283,947

EQUITY Contributed equity 17 35,830,567 32,850,570 Reserves 18(a) 1,459,498 1,949,272 Accumulated losses 18(b) (32,956,072) (31,515,895) Total equity 4,333,993 3,283,947 The above balance sheet should be read in conjunction with the accompanying notes.

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AtCor Medical Holdings Limited Statement of changes in equity For the year ended 30 June 2015

Notes Contributed

Equity Reserves Accumulated

Losses Total

Equity $ $ $ $ Balance at 1 July 2013 32,109,909 1,621,411 (28,852,387) 4,878,933 Loss for the year (2,663,508) (2,663,508) Other comprehensive income 104,068 104,068 Total comprehensive (loss)/income for the year

- 104,068 (2,663,508) (2,559,440)

Transactions with equity holders in their capacity as equity holders:

Capital placement & rights issue (net) 17 740,661 - - 740,661 Share options expensed 18 - 223,793 - 223,793

740,661 223,793 - 964,454

Balance at 30 June 2014 32,850,570 1,949,272 (31,515,895) 3,283,947 Loss for the year (1,440,177) (1,440,177) Other comprehensive (loss) (668,299) (668,299) Total comprehensive (loss) for the year - (668,299) (1,440,177) (2,108,476) Transactions with equity holders in their capacity as equity holders:

Capital placement & rights issue (net) 17 2,812,430 - - 2,812,430 Share options exercised 17 167,567 - - 167,567 Share options expensed 18 - 178,525 - 178,525

2,979,997 178,525 - 3,158,522

Balance at 30 June 2015 35,830,567 1,459,498 (32,956,072) 4,333,993

The above consolidated statement of changes of equity should be read in conjunction with the accompanying notes.

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Cash flow statement For the year ended 30 June 2015


Notes $ $

Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 5,772,602 6,191,655 Payments to suppliers and employees (inclusive of goods and services tax) (8,200,927) (8,049,558) (2,428,325) (1,857,903) Other revenue 461,182 485,874 Interest received 1,496 8,081 Net cash (outflow) from operating activities 28 (1,965,647) (1,363,948) Cash flows from investing activities Payments for property, plant and equipment (47,111) (44,409) Net cash (outflow) from investing activities (47,111) (44,409) Cash flows from financing activities Net proceeds from issue of shares 2,979,997 740,661 Net cash inflow from financing activities 2,979,997 740,661 Net increase/(decrease) in cash and cash equivalents 967,239 (667,696) Cash and cash equivalents at the beginning of the financial year 2,168,156 2,874,209 Effects of exchange rate changes on cash and cash equivalents 314,548 (38,357) Cash and cash equivalents at end of financial year 9 3,449,943 2,168,156 The above cash flow statement should be read in conjunction with the accompanying notes.

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AtCor Medical Holdings Limited Notes to the financial statements

30 June 2015

26

Contents of the notes to the financial statements Page

1 Summary of significant accounting policies 27 2 Capital and financial risk management 33 3 Critical accounting estimates and judgements 34 4 Segment information 35 5 Revenue 36 6 Other income 36 7 Expenses 36 8 Income tax expense 37 9 Current assets - Cash and cash equivalents 38 10 Current assets - Trade and other receivables 38 11 Current assets - Inventories 39 12 Current assets - Other 39 13 Non-current assets - Plant and equipment 40 14 Current liabilities - Trade and other payables 41 15 Current liabilities - Provisions 41 16 Non-current liabilities - Provisions 41 17 Contributed equity 42 18 Reserves and accumulated losses 43 19 Dividends 43 20 Key management personnel disclosures 44 21 Remuneration of auditors 46 22 Contingencies 46 23 Commitments 46 24 Related party transactions 46 25 Subsidiaries 47 26 Economic dependency 47 27 Events occurring after the balance sheet date 47 28 Reconciliation of (loss) after income tax to net cash (outflow) from operating activities 47 29 Earnings per share 48 30 Share-based payments 49 31 Parent entity financial information 51

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1. Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of AtCor Medical Holdings Limited and its subsidiaries. a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. AtCor Medical Holdings Limited is a for-profit entity for the purpose of preparing the financial statements. Compliance with IFRS Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRSs ensures that the financial report of AtCor Medical Holdings Limited complies with International Financial Reporting Standards (IFRS). Historical cost convention These financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. b) Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre‑existing equity interest in the subsidiary. Acquisition‑related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition‑by‑acquisition basis, the Group recognises any non‑controlling interest in the acquiree either at fair value or at the non‑controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred and the amount of any non‑controlling interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. c) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of AtCor Medical Holdings Limited (''company'' or ''parent entity'') as at 30 June 2015 and the results of all subsidiaries for the year then ended. AtCor Medical Holdings Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity. Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(c)). Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.

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d) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Board that is identified as the chief operating decision maker. e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is AtCor Medical Holdings Limited’s functional and presentation currency. ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance

sheet; • income and expenses for each statement of comprehensive income are translated at average exchange rates (unless

this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of other comprehensive income. f) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Revenue is recognised as follows: (i) Medical devices & accessories A sale is recorded when goods have been dispatched to a customer pursuant to a sales order and the associated risk has passed to the carrier or customer. (ii) Services Revenue from services is recognised over the period that the service is provided. (iii) Interest Interest income is recognised when the Group becomes entitled to receive interest. Interest income is recognised at the prevailing interest rates. g) Government grants Grants from the government, including the R&D tax concession, are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate. h) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

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Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. i) Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. j) Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). k) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. l) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement on terms between 30 and 90 days from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the statement of comprehensive income. m) Inventories Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials only. Costs are assigned to individual items of stock on the basis of weighted average costs. n) Investments and other financial assets The Group classifies its other financial assets in the following categories: loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date that are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet. o) Plant and equipment Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

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Depreciation is calculated using the diminishing value method to allocate their cost, net of their residual values, over their estimated useful lives, as follows:

Manufacturing plant and equipment 3-10 years. Furniture, fixtures and equipment 3-5 years.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(k)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income. p) Intangible assets i) Patents Patents have a finite useful life and are carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives. Patents have a useful life of 20 years from grant date. ii) Research and development Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and understanding, is recognised in the statement of comprehensive income as an expense when it is incurred. Expenditure on development activities, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the statement of comprehensive income as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost over the period of the expected benefit, which varies between 5-10 years. q) Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. r) Provisions Provisions for legal claims and service warranties are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. s) Employee benefits (i) Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. (ii) Long service leave The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is measured in accordance with (i) above. The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (iii) Bonus plans A liability for employee benefits in the form of bonus plans is recognised in other creditors when there is no realistic alternative but to settle the liability and at least one of the following conditions is met: • there are formal terms in the plan for determining the amount of the benefit • the amounts to be paid are determined before the time of completion of the financial report, or • past practice gives clear evidence of the amount of the obligation.

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Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled. (iv) Share based payments Share based compensation benefits are provided to employees via the AtCor Medical Holdings Employee Share Option Plan (ESOP). Information relating to this scheme is set out in note 30. The fair value of options granted under the AtCor Medical Holdings Employee Share Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is determined using a Black Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the Group revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share capital and the proceeds received, net of directly attributable transaction costs are credited to share capital. (v) Termination benefits Termination benefits may become payable to some employees in the event of termination prior to expiry of their contract or upon change of control of AtCor Medical Holdings Limited or a subsidiary. The Group recognises termination benefits when it is demonstrably committed to terminating the employment of the employees entitled to termination benefits, or when a change of control of a member of the Group is virtually certain. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

t) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. u) Dividends Provision is made for the amount of any dividend declared on or before the end of the year but not distributed at balance sheet date. v) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. w) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included with other receivables or payables on the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, a tax authority are presented as operating cash flow. x) Parent entity financial information The financial information for the parent entity, AtCor Medical Holdings Limited, disclosed in note 31, has been prepared on the same basis as the consolidated financial statements.

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Tax consolidation legislation AtCor Medical Holdings Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of July 1, 2005. The head entity, AtCor Medical Holdings Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. Investments in subsidiaries Investments in subsidiaries are accounted for at cost in the financial statements of AtCor Medical Holdings Limited, less impairment losses.

y) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below. i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2018 but is available for early adoption. There will be no impact on the Group’s accounting for financial assets or liabilities, as the new requirements only affect the accounting for financial assets and liabilities that are designated at fair value through profit or loss and the Group does not have any such items in the current reporting period. The Group will not be adopting AASB 9 early. ii) AASB 15 Revenue from Contracts with Customers The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The notion of control replaces the existing notion of risks and rewards. The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise transitional adjustments in retained earnings on the date of initial application i.e. without restating the comparative period. The new rules will only need to be applied to contracts that are not completed as of the initial application. A preliminary assessment has identified recognition of lease revenue as an area that is likely to be affected. At this stage the Group does not believe there will be any material impact on the Group’s accounting for revenue. However, the impact on future revenues will be dependent on future revenue contracts and this is yet to be determined. The standard is mandatory for financial years commencing on or after 1 January 2018. The Group will not be adopting AASB15 early. There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

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2. Capital and financial risk management Capital management

The group’s objectives when managing the company’s share capital, reserves and accumulated losses, which represents the group’s capital, are to:

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders; and

• sustain future product development.

Financial risk management

The Group's activities expose it to a variety of financial risks; market risk (primarily currency risk), credit risk, and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of foreign exchange risk and aging analysis for credit risk.

Financial risk management is carried out by the Chief Financial Officer (CFO) and overseen by the Audit & Risk Committee, a subcommittee of the Board of Directors.

(a) Market risk

Foreign exchange risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the US Dollar and the Euro.

The Group’s exposure to foreign currency exchange risk at the reporting date was as follows:

30 June 2015 30 June 2014 In USD In EUR In USD In EUR Trade Receivables 176,683 152,644 186,050 308,057 Financial Assets 342,969 405,572 799,487 277,217 Trade Payables (87,124) (25,969) (156,735) (34,479) Sensitivity Based on the financial instruments held at 30 June 2015, had the Australian dollar weakened/strengthened by 10% against the US dollar with all other variables held constant, the Group’s pre-tax result for the year would have varied by $62,410/($56,168) (2014: $97,700/($87,931)). Had the Australian dollar weakened/strengthened by 10% against the Euro with all other variables held constant, the Group’s pre-tax result for the year would have varied by $85,651/($77,086) (2014: $88,879/($79,992)).

(b) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The Group has no significant concentrations of credit risk. For banks and financial institutions, only independently rated and reputable parties are accepted. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Terms of trade provided to creditworthy customers are between 30 and 90 days, whilst customers deemed higher risk arrange a letter of credit or prepay for goods.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

(d) Fair value estimation

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The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities approximates their carrying values.

3. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The financial report is prepared on the basis that the Group will continue as a going concern. The cash flow projection and other consideration made by the directors in these circumstances involve estimates and judgements of future cash flow that are believed to be reasonable.

The investment in subsidiaries recorded in the parent entity is based on discounted cash flow calculations that incorporate judgements and estimates of future earnings that are believed to be reasonable.

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4. Segment information

(a) Description of segments

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Board considers the business from a geographical perspective and has identified three reportable segments, which are by geographic area.

Geographic areas are: • Americas (includes global pharmaceutical trials business) • Europe (includes Middle East and Africa) • Asia Pacific (includes Asia & Australia/NZ)

(b) Segmental information provided to the Board

2015 Americas Europe Asia Pacific

Inter- segment

eliminations/ unallocated Consolidated

$ $ $ $ $

Sales to external customers 3,916,888 779,781 770,789 - 5,467,457 Intersegment sales - - 1,188,109 (1,188,109) - Total sales revenue 3,916,888 779,781 1,958,898 (1,188,109) 5,467,457 Other revenue/income 7,107 - 461,182 - 468,289 Total segment revenue/income 3,923,995 779,781 2,420,080 (1,188,109) 5,935,746 Segment result 380,004 30,468 (2,875,366) - (2,464,894) Unallocated revenue less unallocated expenses 1,024,717 Loss before income tax (1,440,177) Income tax expense - Loss for the year (1,440,177)

2014 Americas Europe Asia Pacific

Inter- segment

eliminations/ unallocated Consolidated

$ $ $ $

Sales to external customers 3,302,997 1,004,230 746,057 - 5,053,284 Intersegment sales - - 1,384,528 (1,384,528) - Total sales revenue 3,302,997 1,004,230 2,130,585 (1,384,528) 5,053,284 Other revenue/income 12,305 - 490,449 - 502,754 Total segment revenue/income 3,315,302 1,004,230 2,621,034 (1,384,528) 5,556,038 Segment result 424,811 132,664 (3,143,321) - (2,585,846) Unallocated revenue less unallocated expenses (77,662) Loss before income tax (2,663,508) Income tax expense - Loss for the year (2,663,508) (c) Notes to and forming part of the segment information Inter-segment transfers Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an ''arm’s-length'' basis and are eliminated on consolidation. Segment revenue Revenues of approximately $1,048,273 (2014: $1,643,003) were derived from two customers. These revenues are attributable to the Americas operating segment.

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5. Revenue Consolidated 2015 2014

$ $

From continuing operations

Sales revenue Sale of goods 4,492,967 3,928,094 Sale of services 974,490 1,125,190

5,467,457 5,053,284 Other revenue

Interest 1,496 8,081

5,468,953 5,061,365

6. Other income Consolidated 2015 2014

$ $

Government grants (note (a)) - 75,118 R&D tax concession (note(b)) 461,182 410,756 Foreign exchange gain 987,476 - Others 7,107 16,880

1,455,765

502,754

(a) Government grants

Commercialisation Australia grants of $Nil (2014: $75,118) were recognised as other income by the Group during the financial year. There are no unfulfilled conditions or other contingencies attaching to these grants.

(b) R&D tax concession

A refund of $461,182 was received from the Australian Tax Office under the R&D tax concession program in 2015 (2014: $410,756)

7. Expenses Consolidated 2015 2014

$ $

Loss before income tax includes the following specific expenses:

Depreciation on plant and equipment 88,056 98,503 Employee benefit expense 5,271,975 5,030,171 Rental expense relating to operating leases 171,640 154,511 Research and development 1,223,658 1,023,552

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8. Income tax expense Consolidated 2015 2014 $ $

(a) Income tax expense

The income tax expense for the financial year differs from the amount calculated on the (loss). The differences are reconciled as follows:

(Loss) from continuing operations before income tax expense (1,440,177) (2,663,508) Tax at the Australian tax rate of 30% (2014 - 30%) (432,053) (799,052) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

Non-assessable income – R&D tax concession (138,354) (123,166) Share based payment 53,558 67,138 Sundry items 377 484

(516,472) (854,596) Differences in overseas tax rates 126,259 181,393 Benefit of tax losses and temporary differences not recognised 390,213 673,202 Income tax expense - -


$ $

(b) Tax losses

Unused tax losses for which no deferred tax asset has been recognised: 24,963,763 23,821,437 Potential tax benefit* 7,986,229 7,451,886

* Tax rate varies between different jurisdictions where the Group has operations (Australia and USA)

This benefit for tax losses will only be obtained if:

(i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;

(ii) the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and (iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the

losses.

(c) Tax consolidation legislation

AtCor Medical Holdings Limited and its wholly-owned Australian controlled entities are consolidated for income tax purposes. The accounting policy in relation to this legislation is set out in note 1(x).

As at the date of this report the entities in the tax consolidation group had not entered into a tax sharing agreement. No compensation has been received or paid for any current tax payable or deferred tax assets relating to tax losses assumed by the parent entity since implementation of the tax consolidation regime.

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9. Current assets - Cash and cash equivalents Consolidated 2015 2014

$ $

Cash at bank and on hand 3,449,943 2,168,156 3,449,943 2,168,156

(a) Cash at bank and on hand

These are a combination of non-interest bearing and interest bearing at floating interest rates between 0.0% and 0.5% (2014: 0.0% and 0.5%).

10. Current assets - Trade and other receivables Consolidated 2015 2014

$ $

Trade receivables 1,565,168 1,564,068 Less: Provision for doubtful debts (a) (40,872) (52,637) 1,524,296 1,511,431 Other receivables 24,612 36,281 1,548,908 1,547,712

(a) Impaired trade receivables

As at 30 June 2015 current trade receivables of the Group with a nominal value of $40,872 (2014: $52,637) were impaired. The amount of the provision was $40,872 (2014: $52,637).


$

$

At 1 July 52,637 57,819 Provision for impairment recognised during the year 8,454 13,943 Receivables written off during the year as uncollectible (20,219) (19,125) 40,872 52,637

The creation and release of the provision for impaired receivables has been included in 'marketing and sales expenses' in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

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10. Current assets - Trade and other receivables (continued)

39

(b) Past due but not impaired

As of 30 June 2015, trade receivables of $160,215 (2014: $267,689) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:


$

$

0 – 30 days 58,786 210,845 30 – 60 days 48,377 19,030 > 60 days 53,052 37,814 160,215 267,689

The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due.

(c) Other receivables

These amounts generally arise from transactions outside the usual operating activities of the Group.

(d) Fair value, foreign exchange and credit risk

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to note 2 for more information on the risk management policy of the Group, the credit quality and foreign currency risk of the Group’s trade receivables.

11. Current assets - Inventories Consolidated 2015 2014

$ $

Raw materials and stores - at cost 452,033 452,379 Finished goods at cost 87,365 85,160 539,398 537,539

Inventories recognised as expense during the year ended 30 June 2015 amounted to $329,514 (2014: $437,449). A charge of $nil was taken to write-off obsolete inventories in the year ended 30 June 2015 (2014: $nil).

12. Current assets – Other Consolidated 2015 2014

$ $

Prepayments 143,351 75,980 Other 20,511 22,307 163,862 98,287

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13. Non-current assets - Plant and equipment

Consolidated Manufacturing plant

and equipment Furniture, fixtures

and equipment Devices leased to

customers Total

$ $ $ $

At 1 July 2013 Cost 482,368 725,095 92,490 1,299,953 Accumulated depreciation (265,952) (602,652) (81,168) (949,772) Net book amount 216,416 122,443 11,322 350,181 Year ended 30 June 2014 Opening net book amount 216,416 122,443 11,322 350,181 Additions 13,732 30,677 - 44,409 Exchange differences - (16,606) 95 (16,511) Depreciation charge (47,768) (49,599) (1,136) (98,503) Closing net book amount 182,380 86,915 10,281 279,576 At 30 June 2014 Cost 496,100 739,166 92,585 1,327,851 Accumulated depreciation (313,720) (652,251) (82,304) (1,048,275) Net book amount 182,380 86,915 10,281 279,576 Year ended 30 June 2015 Opening net book amount 182,380 86,915 10,281 279,576 Additions 4,765 42,346 - 47,111 Exchange differences - 11,623 1,231 12,854 Depreciation charge (40,389) (36,155) (11,512) (88,056) Closing net book amount 146,756 104,729 - 251,485 At 30 June 2015 Cost 500,865 793,135 93,816 1,387,816 Accumulated depreciation (354,109) (688,406) (93,816) (1,136,331) Net book amount 146,756 104,729 - 251,485

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14. Current liabilities – Trade and other payables Consolidated 2015 2014

$ $

Trade payables 567,721 433,988 Customer prepayments 140,417 76,522 Employee benefits – annual leave 316,083 313,240 Other payables 430,124 391,823 1,454,345 1,215,573

15. Current liabilities - Provisions Consolidated 2015 2014

$ $

Current employee benefits – long service leave 128,976 110,728 The current portion of this liability includes the unconditional entitlements to long service leave where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount of the provision of $128,976 (2014: 110,728) is presented as current since the Group does not have the unconditional right to defer settlement for any of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months. 2015 2014 $ $ 128,976 110,728

16. Non-current liabilities – Provisions Consolidated 2015 2014

$ $

Employee benefits – long service leave 36,282 21,022

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17. Contributed equity 2015 2014 2015 2014

Shares Shares $ $

(a) Share capital

Fully paid ordinary shares 180,879,646 157,440,279 35,830,567 32,850,570

(b) Movements in ordinary share capital:

Date Details Number

of shares

Issue price $

30 June 2013 Opening balance 150,765,279 32,109,909

22 August 2013 Shares issued on exercise of options 1,000,000 $0.12 120,000

30 September 2013 Shares issued on exercise of options 1,000,000 $0.091 91,000

30 October 2013 Shares issued on exercise of options 271,000 $0.13 35,230

30 October 2013 Shares issued on exercise of options 500,000 $0.091 45,500

4 November 2013 Shares issued on exercise of options 2,664,000 $0.13 346,320

4 November 2013 Shares issued on exercise of options 175,000 $0.075 13,125

4 November 2013 Shares issued on exercise of options 25,000 $0.098 2,450

3 December 2013 Shares issued on exercise of options 500,000 $0.091 45,500

3 December 2013 Shares issued on exercise of options 460,000 $0.08 36,800

8 January 2014 Shares issued on exercise of options 80,000 $0.08 6,400

Less: listing fees (1,664)

30 June 2014 Closing balance 157,440,279 32,850,570

8 December 2014 Share placement 10,752,700 $0.093 1,000,001

Less: fees (12,000)

12 March 2015 Shares issued on exercise of options 22,500 $0.12 2,700












25 June 2015 Share placement 10,900,000 $0.18 1,962,000

Less: fees (137,571)

180,879,646 35,830,567

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(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value.

(d) Employee Share Option Plan

Information relating to the AtCor Medical Holdings Limited Employee Share Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in note 30.

18. Reserves and accumulated losses Consolidated 2015 2014

$ $

(a) Reserves

Share-based payments reserve 1,708,257 1,529,732 Foreign currency translation reserve (248,759) 419,540 1,459,498 1,949,272

Movements:

Share-based payments reserve Balance 1 July 1,529,732 1,305,939 Option expense 178,525 223,793 Balance 30 June 1,708,257 1,529,732

Foreign currency translation reserve

Balance 1 July 419,540 315,472 Currency translation differences arising through the year (668,299) 104,068 Balance 30 June (248,759) 419,540

(b) Accumulated losses

Movements in accumulated losses were as follows:


$ $

Balance 1 July (31,515,895) (28,852,387) Net (loss) for the year (1,440,177) (2,663,508) Balance 30 June (32,956,072) (31,515,895)

(c) Nature and purpose of reserves

Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options issued but not exercised.

19. Dividends No dividends were paid or declared since 30 June 2015 and the directors do not recommend the payment of a dividend. There are no franking credits as at 30 June 2015 (2014: Nil).

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20. Key management personnel disclosures

(a) Key management personnel compensation Consolidated 2015 2014 $ $ Short-term employee benefits 1,605,058 1,431,002 Long-term benefits 10,926 11,891 Post-employment benefits 78,667 63,310

Share-based payments 118,438 149,832

1,813,089 1,656,035

The Group has taken advantage of the relief provided by Corporations Regulations and has transferred the detailed remuneration disclosures to the Directors’ report. The relevant information can be found in the remuneration report section of the Directors’ Report.

(b) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options Details of options provided as remuneration and shares issued on the exercise of such options, together with

terms and conditions of the options, can be found in the remuneration report section of the Directors’ Report.

(ii) Option holdings The number of options over ordinary shares in the company held during the financial year by each director of

AtCor Medical Holdings Ltd and other key management personnel of the Group, including their personally related parties, are set out below.

2015 Name

Balance at the start of

the year

Granted during the year as

compensation

Exercised during the year

Expired during the

year

Balance at the end of the year

Vested and exercisable at the end of the

year Directors of AtCor Medical Holdings Ltd

D O’Dwyer (Chairman) - - - - - - D R Ross (CEO) 6,000,000 - - - 6,000,000 4,133,333 M O’Rourke - - - - - - P Jenkins - - - - - - D.L Brookes - - - - - -

Other key management personnel of the Group

P Manley 1,550,000 200,000 (750,000) (150,000) 850,000 166,667 D Kurschinski 2,775,000 275,000 - (250,000) 2,800,000 1,708,334 M Harding 1,650,000 450,000 (616,667) (400,000) 1,083,333 300,000

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20. Key management personnel disclosures (continued)

(iii) Share holdings The numbers of shares in the company held during the financial year by each director of AtCor Medical

Holdings Ltd and other key management personnel of the Group, including their close family members, are set out below. (Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity).

2015

Name

Balance at the start of

the year

Received during the

year on the exercise of

options

Other changes

during the year

Balance at the end of the year

Directors of AtCor Medical Holdings Ltd Ordinary shares D O’Dwyer (Chairman) 4,117,322 - - 4,117,322 D.R Ross (CEO) 2,103,052 - - 2,103,052 M O’Rourke 10,311,396 - - 10,311,396 P.R Jenkins 1,209,394 - - 1,209,394 D.L Brookes 908,257 - - 908,257 Other key management personnel of the Group Ordinary shares P Manley 608,334 750,000 - 1,358,334 D Kurschinski 158,522 - - 158,522 M Harding 677,369 616,667 (202,562) 1,091,474

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21. Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:


$ $

Audit services PricewaterhouseCoopers Australian firm

Audit and review of financial reports and other audit work under the Corporations Act 2001 119,906 116,028

Other assurance services

PricewaterhouseCoopers Australian firm Audit of Commercialisation Australia grant - 8,500

Total remuneration for assurance services 119,906 124,528

22. Contingencies

(a) Contingent liabilities No contingent liabilities exist at this time.

(b) Contingent assets No contingent assets exist at this time.

23. Commitments

(a) Lease commitments : Group as lessee


$ $

Commitments for minimum lease payments in relation to non-cancellable operating leases for office premises and office equipment are payable as follows:

Within one year 192,415 102,809 Later than one year but not later than five years 19,198 95,203 More than five years - - 211,613 198,012

24. Related party transactions

(a) Parent entity

The parent entity within the Group is AtCor Medical Holdings Limited. The ultimate Australian parent entity is AtCor Medical Holdings Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 25.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 20 and in the remuneration report within the Directors’ Report.

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25. Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(d):

Name of entity Country of

incorporation Class of shares Equity holding * Equity holding * 2015 2014

% %

AtCor Medical Pty Limited Australia Ordinary 100% 100% AtCor Medical Inc. USA Ordinary 100% 100% AtCor Medical UK Limited United Kingdom Ordinary - 100%

*

The proportion of ownership interest is equal to the proportion of voting power held.

AtCor Medical UK Limited was deregistered during 2015.

26. Economic dependency The Group depends upon single suppliers of some key components for its SphygmoCor device due to manufacturing specifications requiring these particular components.

27. Events occurring after the balance sheet date During July 2015 the Company completed a fully underwritten 1:10 rights offer, which raised $3,202,811 before fees and expenses. The offer at $0.18/share was the market price at the time of issue.

28. Reconciliation of (loss) after income tax to net cash (outflow) from operating activities


$ $

Loss for the year (1,440,177) (2,663,508) Depreciation and amortisation 88,056 98,503 Non-cash employee benefits expense - share-based payments 178,525 223,793 Unrealised exchange difference (995,700) 158,936 Change in operating assets and liabilities:

(Increase)/Decrease in trade and other receivables (1,196) 1,120,795 (Increase) in inventories (1,859) (211,745) (Increase)/Decrease in other operating assets (65,575) 58,029 Increase/(Decrease) in trade and other payables 238,772 (179,464) Increase in other provisions 33,507 30,713

Net cash (outflow) from operating activities (1,965,647) (1,363,948) For

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29. Earnings per share Consolidated 2015 2014

Cents Cents

(a) Earnings per share

Basic earnings per share (0.9) (1.7) Diluted earnings per share (0.9) (1.7)

(b) Reconciliations of earnings used in calculating earnings per share

Basic earnings per share Loss from continuing operations (1,440,177) (2,663,508) Diluted earnings per share Loss from continuing operations attributable to the ordinary equity holders of the company used in calculating diluted earnings per share (1,440,177) (2,663,508)

(c) Weighted average number of shares used as the denominator Consolidated 2015 2014

Number Number

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 164,081,322 155,336,416 Adjustments for calculation of diluted earnings per share:

Options - - Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 164,081,322 155,336,416

(d) Information concerning the classification of securities

(i) Options Options granted to employees under the AtCor Medical Holdings Employee Share Option Plan are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the options are set out in note 30.

No options granted are included in the calculation of diluted earnings per share because they are not dilutive for the year ended 30 June 2015.

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30. Share-based payments

(a) Employee Share Option Plan (ESOP)

The AtCor Medical Holdings Employee Option Plan was approved by shareholders at the 2005 annual general meeting and amendments were approved at the 2006 & 2008 annual general meetings. All staff are eligible to participate in the plan at the discretion of the directors (including executive directors) following recommendations from the remuneration committee, a sub-committee of the AtCor Medical Holdings Limited Board of Directors.

Options are granted under the plan for no consideration. Options are granted for a 5 year period, and 33.3% of each new tranche vests and is exercisable after each of the first 3 anniversaries of the date of grant.

Options granted under the plan carry no dividend or voting rights.

When exercisable, each option is convertible into 1 ordinary share.

The exercise price of options is no less than the weighted average price at which the company’s shares are traded on the Australian Stock Exchange during the 5 trading days immediately before the options are granted.

Set out below are summaries of options granted under the plan:

Grant Date Expiry date Exercise

price

Balance at start of the

year

Granted during the

year

Exercised during the

year

Expired/ Forfeited

during the year

Balance at end of the

year

Exercisable at end of the

year Number Number Number Number Number Number

2015 20 Aug 2009 20 Aug 2014 $0.165 400,000 - - (400,000) - - 18 Feb 2010 18 Feb 2015 $0.164 625,000 - - (625,000) - - 1 Mar 2010 1 Mar 2015 $0.164 150,000 - - (150,000) - - 17 Feb 2011 17 Feb 2016 $0.120 1,785,000 - (422,500) - 1,362,500 1,362,500 21 Oct 2011 21 Oct 2016 $0.084 2,500,000 - - - 2,500,000 2,500,000 16 Feb 2012 16 Feb 2017 $0.098 2,180,000 - (572,500) - 1,607,500 1,607,500 23 Aug 2012 23 Aug 2017 $0.075 3,625,000 - (670,000) - 2,955,000 2,438,334 5 Oct 2012 5 Oct 2017 $0.075 300,000 - (100,000) - 200,000 66,667 26 Oct 2012 26 Oct 2017 $0.084 1,400,000 - - - 1,400,000 933,333 19 Nov 2012 19 Nov 2017 $0.085 125,000 - - - 125,000 83,333 29 Aug 2013 29 Aug 2018 $0.139 3,215,000 - (21,667) - 3,193,333 1,050,004 31 Oct 2013 31 Oct 2018 $0.181 2,100,000 - - - 2,100,000 700,000 28 Aug 2014 28 Aug 2019 $0.112 - 1,825,000 - - 1,825,000 - 24 Mar 2015 24 Mar 2020 $0.194 - 350,000 - - 350,000 - 25 Jun 2015 25 Jun 2020 $0.200 - 150,000 - - 150,000 - Total 18,405,000 2,325,000 (1,786,667) (1,175,000) 17,768,333 10,741,671

Weighted average exercise price $0.11 $0.13 $0.09 $0.16 $0.11

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30. Share-based payments (continued)

Grant Date Expiry date Exercise

price

Balance at start of the

year

Granted during the

year

Exercised during the

year

Expired/ Forfeited

during the year

Balance at end of the

year

Exercisable at end of the

year Number Number Number Number Number Number

2014 22 Aug 2008 22 Aug 2013 $0.120 1,000,000 - (1,000,000) - - - 4 Nov 2008 4 Nov 2013 $0.130 2,935,000 - (2,935,000) - - - 20 Aug 2009 20 Aug 2014 $0.165 400,000 - - - 400,000 400,000 21 Oct 2009 21 Oct 2013 $0.215 1,000,000 - - (1,000,000) - - 18 Feb 2010 18 Feb 2015 $0.164 625,000 - - - 625,000 625,000 1 Mar 2010 1 Mar 2015 $0.164 150,000 - - - 150,000 150,000 17 Feb 2011 17 Feb 2016 $0.120 1,785,000 - - - 1,785,000 1,785,000 21 Oct 2011 21 Oct 2016 $0.084 2,500,000 - - - 2,500,000 166,667 16 Feb 2012 16 Feb 2017 $0.098 2,215,000 - (25,000) (10,000) 2,180,000 1,424,998 23 Aug 2012 23 Aug 2017 $0.075 3,700,000 - (75,000) - 3,625,000 1,154,173 5 Oct 2012 5 Oct 2017 $0.075 400,000 - (100,000) - 300,000 33,334 26 Oct 2012 26 Oct 2017 $0.084 1,400,000 - - - 1,400,000 466,667 19 Nov 2012 19 Nov 2017 $0.085 125,000 - - - 125,000 41,667 13 Dec 2012 13 Dec 2017 $0.077 350,000 - - (350,000) - - 29 Aug 2013 29 Aug 2018 $0.139 - 3,215,000 - - 3,215,000 - 31 Oct 2013 31 Oct 2018 $0.181 - 2,100,000 - - 2,100,000 - Total 18,585,000 5,315,000 (4,135,000) (1,360,000) 18,405,000 6,247,506

Weighted average exercise price $0.11 $0.16 $0.13 $0.18 $0.11

Nil options were forfeited during 2015 (2014: 360,000) and 1,175,000 options expired (2014: 1,000,000) in the same period whilst 1,786,667 options were exercised (2014: 4,135,000).

The weighted average remaining contractual life of share options outstanding at the end of the period was 2.5 years (2014 – 3.0 years).

Fair value of options granted The weighted average assessed fair value at grant date of options granted during the year ended 2015 was 4.8 cents per option (2014 – 2.5 cents). The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The model inputs for options granted during the year ended 30 June 2015 included:

(a) options are granted for no consideration, have a five year life, and 33.3% of each tranche vests and is exercisable after each of the first three anniversaries of the date of grant

(b) ave exercise price: $0.13 (2014 - $0.16)

(c) expiry date: 5 years from grant date (2014 – 5 years from grant date)

(d) Ave share price at grant date: $0.115 (2014 - $0.13)

(e) expected price volatility of the company’s shares: 60% (2014 - 60%)

(f) expected dividend yield:nil% (2014 - nil%)

(g) risk-free interest rate: 2.25% (2014 - 3.00%)

The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

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(b) Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

Consolidated 2015 2014 $ $

Options issued under employee option plan 178,525 223,793

31. Parent entity financial information

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

2015 2014

$ $

Balance sheet

Current assets 1,903,023 442,588

Total assets 43,696,048 39,177,940

Current liabilities 808,835 522,643

Total liabilities 14,066,019 11,119,930

Shareholders equity

Issued capital 42,287,857 39,307,860 Reserves – Share based payments 1,708,257 1,529,732 Accumulated losses (14,366,085) (12,779,582)

29,630,029 28,058,010

Loss for the year (1,586,503) (5,761,033)

Total comprehensive loss (1,586,503) (5,761,033)

(b) Guarantees entered into by the parent entity

No guarantees have been entered into by the parent entity during 2015 or 2014.

(c) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2015 or 30 June 2014.

(d) Contractual commitments

The parent entity has no contractual commitments as at the date of this report.

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AtCor Medical Holdings Limited Directors' declaration

30 June 2015 In the directors’ opinion:

(a) the financial statements and notes set out on pages 21 to 51 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(ii) giving a true and fair view of the consolidated entity's financial position as at 30 June 2015 and of its performance for the financial year ended on that date; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable

Note 1(a) confirms that the financial statements also comply with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

D O’Dwyer - Director

Sydney 20 August 2015

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